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Credit Glossary

Plain-English definitions of the credit terms you actually need — what each one means, why it matters for your score, and a quick example. Every term links to the full guide.

Score factors

Payment history: Payment history is the record of whether you've paid your credit accounts on time, and it is the single largest factor in your FICO score at about 35%.
Credit utilization: Credit utilization is how much of your available credit you're using — your reported balance divided by your credit limit — and it makes up about 30% of your FICO score.
Length of credit history: Length of credit history is the age of your credit accounts — including your oldest account and the average age of all of them — and it makes up about 15% of your FICO score.
Credit mix: Credit mix is the variety of credit types you have — such as credit cards alongside installment loans — and it makes up about 10% of your FICO score.
New credit: New credit reflects your recent applications and hard inquiries for new accounts, and it makes up about 10% of your FICO score.

Scores & reports

FICO score: A FICO score is a three-digit credit score (300–850) created by the Fair Isaac Corporation that lenders use to gauge how you've handled borrowing. It is built from five weighted factors: payment history (35%), credit utilization (30%), length of history (15%), new credit (10%), and credit mix (10%).
VantageScore: VantageScore is a credit scoring model jointly developed by the three credit bureaus (Equifax, Experian, TransUnion) as an alternative to FICO. Like FICO, most VantageScore models run from 300 to 850, but the two weigh the underlying factors a little differently.
Credit report: A credit report is a detailed record of your borrowing history kept by the credit bureaus — your accounts, balances, payment history, credit inquiries, and any collections or charge-offs. Credit scores like FICO and VantageScore are calculated from the data in this report.
Credit bureau: A credit bureau is a company that collects and stores your credit data and sells it to lenders as a credit report. There are three main bureaus in the US — Equifax, Experian, and TransUnion — and they jointly developed the VantageScore model.

Cards & cost

Secured card: A secured card is a real credit card that requires a refundable security deposit (often around $200), which usually becomes your credit limit. It reports your payments to the credit bureaus and builds history just like a regular card.
Credit limit: Your credit limit is the maximum balance an issuer lets you carry on a credit card. On a secured card, the limit usually equals your refundable deposit.
Annual fee: An annual fee is a yearly charge some credit cards bill just for keeping the account open, separate from interest. Many beginner-friendly cards have no annual fee.
APR: APR (annual percentage rate) is the yearly interest rate a card charges on a balance you carry past the due date. You pay it only if you don't pay your statement in full.
Credit-builder loan: A credit-builder loan works backwards: the lender locks a set amount in a savings account, you make fixed monthly payments that report to the bureaus, then receive the money back minus interest and fees.

Payments & timing

Statement closing date: The statement closing date is the last day of your credit card's billing cycle, when the card totals what you owe, generates your statement, and reports that balance to the three credit bureaus.
Due date: The payment due date is when your credit card payment must be made, usually about 21 to 25 days after the statement closing date. Pay your statement balance in full by then and you owe no interest on purchases.
Grace period: The grace period is the window between your statement closing date and your payment due date, at least 21 days by federal law. Pay your statement balance in full within it and you owe no interest on purchases.

Inquiries

Hard inquiry: A hard inquiry is a credit check a lender runs when you apply for new credit, such as a credit card or loan, that appears on your credit report and is visible to other lenders.
Soft inquiry: A soft inquiry is a credit check that does not result from a new credit application, such as checking your own score, a prequalification offer, or a background check. It is visible only to you and does not factor into your score.

Identity & eligibility

Authorized user: An authorized user is someone added to another person's credit card account, allowed to use it without being legally responsible for the debt. The issuer can report that account's history — its age, payment record, and credit limit — to the authorized user's own credit report.
ITIN: An ITIN (Individual Taxpayer Identification Number) is a tax-processing number the IRS issues to people who are not eligible for a Social Security number; you apply with IRS Form W-7. Many lenders accept it in place of an SSN to verify your identity on a credit application.
SSN: An SSN (Social Security number) is a nine-digit number issued by the US government, used by many lenders to identify you and pull your credit. It is the most common identifier on credit applications, but it is not the only one.

Negative marks

Charge-off: A charge-off is when a creditor declares a debt unlikely to be collected and writes it off its books, typically after about 180 days of non-payment. The account is marked as a charge-off, but you still legally owe the money.
Collection: A collection is an unpaid debt that has been turned over or sold to a collection agency to recover. It appears as a collection account on your credit report and stays there for seven years from the date of first delinquency.

Full guides

What is a good credit score?How credit utilization works How to build credit from scratch

Educational only — not financial advice. No guarantees.